Coty slows sales slump for Q4 and severs ties with Younique

By Becky Bargh 29-Aug-2019

Earlier this year, the personal care giant reported $3bn writedown in brand value

Covergirl is part of Coty's Consumer Beauty division

Coty has announced a slowdown in its revenue slump with an 8% decrease to US$2.1bn for months ended 30 June 2019.

Its 2019 third quarter results showed a 10.4% revenue slip to $1.99bn.

The personal care heavyweight has suffered tumultuous sales since its acquisition of P&G’s beauty brands three years ago.

This caused it to write down a $3bn loss in brand value and prompted a four year restructuring plan to slow declining sales and improve its operating margin.

Its Consumer Beauty division suffered the greatest loss in Q4 with a 15.2% loss.

While its Professional Beauty arm suffered a 7% drop in revenue, its Luxury division reported a 1.7% increase in net revenue.

“2019 is the beginning of a new phase in Coty’s journey,” said CEO Pierre Laubies.

“We are now fully engaged in FY20. Our turnaround plan focuses on reshaping and simplifying our beauty business to generate fuel for growth and leverage the potential of our Consumer Beauty brands, while continuing to improve growth and margins in our Luxury and Professional Beauty divisions.

Meanwhile, CFO Pierre-André Terisse has his sights set on achieving “stronger operating margins at 14-16%, and free cash flow above $1bn.”

Terisse continued: “FY20 will be the first step towards these goals, and building on the delivery of FY19, we are confident in the delivery of our targets for the coming year.”

Younique split

Image via Instagram @younique_corporate

The business has also sold its 60% share in social selling platform Younique.

Coty bought the shares for a cash sum of US$600m in 2017, in an effort to build its Consumer Beauty division.

It will sell its controlling stake back to Yonuqie’s founders.

“I am grateful for the collaboration and knowledge we have gained from our partnership with Coty,” said Younique’s CEO Derek Maxfield.

He added that Younique was “excited” to return to our entrepreneurial roots armed with the knowledge and insights gained from the partnership experience.”

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Laubies added: “We wish Derek and the teams all the best for Younique’s next chapter.”